Stocks Fall for Fourth Straight Week
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U.S. stocks fell, sending the Dow Jones industrial average to its fourth straight weekly retreat, after profit outlooks weakened, home prices plunged and the government confirmed that the economy shrank the most since 2001.
MBIA and Discover Financial Services each slumped more than 10 percent, driving financial institutions to the biggest retreat in the Standard & Poor's 500-stock index, following evidence the year-long recession is deepening.
The Dow slipped 0.7 percent, to 8515.55. The S&P 500 declined 1.7 percent to 872.80 this week. The Nasdaq composite index fell 2.2 percent to 1530.24. Trading was light last week because of the Christmas holiday, with the volume of shares traded on U.S. exchanges significantly lower than normal.
"The recession is going to be longer and more severe than most people anticipate, and I don't see a recovery in the stock market anytime soon," said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisory Services. "It looks like 2009 is going to be a difficult year."
The National Association of Realtors said the median resale price of single-family houses dropped 13 percent last month, the most since the group began keeping records in 1968. The Commerce Department said the economy contracted by 0.5 percent in the third quarter as consumer spending fell the most in almost three decades. Initial jobless claims rose to 586,000, the most since November 1982.
The S&P 500 extended its 2008 slide to 41 percent. The retreat in the S&P 500 this year caused losses at all but six of the 1,601 U.S. mutual funds that invest in stocks and have more than $250 million in assets, according to data compiled by Bloomberg. For 242 funds, the loss was at least 50 percent.
General Motors fell 18 percent, despite an end-of-week rebound, as its debt was cut deeper into junk territory. Textron, maker of Bell helicopters, lost 15 percent after saying profit this quarter will trail forecasts.
Yields on Treasury securities increased as the government sold a record $66 billion of two- and five-year notes to finance the widening budget deficit. The two-year note's yield, which fell to a record 0.65 percent on Dec. 16, rose to 0.89 percent from 0.74 percent.
The Treasury will auction $26 billion of three-month bills and $27 billion of six-month bills on Dec. 29. They yielded 0.01 percent and 0.26 percent, respectively, in when-issued trading. One-month bills will be sold the next day.
